The Cost of Market Timing

The Cost of Market Timing

The quote below from The Social Animal by David Brooks reiterates why we do not support market timing, even in the current market environment. Although the last few months have been choppy, involving a near 10% correction in the S&P 500 Index, the overall momentum is positive. Regardless of our outlook, you should never attempt to try to time the stock market as illustrated by this example:

Between 1998 and 2001 the Firsthand Technology Value mutual fund produced an annualized total return of 16 percent. The average individual investor in this fund, however, lost 31.6 percent of his or her money over this time. Why? Because (they) thought they could get in and out of the market at the right moments. They missed the important up days and caught the devastating down ones.

You may be interested in the following related items:

Top Six Investment Mistakes
June 13, 2012 blog post, Momentum, Bell Investment Advisors’ Finance Blog

Strategies for Investing in Volatile Markets
April 2012 webinar video presentation
by Jim Bell, CFP®, President and Founder, and Marivic Hammond, Investment Advisor

Momentum Investing: How to Gauge the Market’s Opinion of the Future
September 2011 white paper by Matt King, CFA, Chief Investment Officer, Managing Director

Persistence of Savers and Investors
January 2010 article by Jim Bell, CFP®, President and Founder

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